Drop in gas prices benefits US drivers, economy

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Gas prices in Montpelier went down sharply from what they were last month.

By Jonathan Fahey
Associated Press
April 23, 2013

NEW YORK — A sharp decline in the price of oil this month is making gasoline cheaper at a time of year when it typically gets more expensive. It’s a relief to motorists and business owners and a positive development for the economy.

Over the past three weeks, the price of oil has fallen by 9 percent to $89 a barrel. That has helped extend a slide in gasoline prices that began in late February. Nationwide, average retail prices have fallen by 27 cents per gallon, or 7 percent, since Feb. 27, to $3.52 per gallon. In Massachusetts, the average was $3.45. Analysts say pump prices could fall another 20 cents over the next two months.

The price of oil is being driven lower by rising global supplies and lower-than-expected demand in the world’s two largest economies, the United States and China. As oil and gasoline become more affordable, the economy benefits because goods become less expensive to transport and motorists have more money to spend on other things.

Over the course of a year, a decline of 10 cents per gallon translates to $13 billion in savings at the pump.

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Gasoline prices typically rise in the late winter and spring as refiners shut down parts of their plants to perform maintenance and begin making more costly blends of gasoline required by federal clean-air regulations.

The trend was earlier and less dramatic this year. Pump prices only came within 15 cents of last year’s peak.

Oil production is growing quickly in the United States and Canada, helping boost global supplies.

And some of the factors that pushed prices higher the two previous years — political turmoil in North Africa and the Middle East and refinery disruptions in the United States — haven’t materialized this spring.